News in South Africa 29th September:

1. Unemployment shock:

SA’s unemployment rate could reach its highest since labour force data began to be collected. Economists say the country’s dwindling growth rate falls short of its growing need for employment, and this could lead to a decline in social cohesion.

Unemployment shock
Image taken by: Timur Weber

Recent data from financial services firm PwC expects that by 2030 South Africa’s unemployment rate will be sitting at 40%.

The group said that this is due to a faster growth rate in the labour force, with economic growth and job creation unable to keep up.

Almost 350,000 adults are to be added to the labour pool every year, PwC said, while the economy is only able to grow at a rate supporting around 200,000 jobs per year. This will drive unemployment higher.

PwC’s downside scenario indicates that South Africa’s unemployment rate would be sitting at 40% by the end of the decade.

The country’s official current unemployment rate, as provided by Stats SA’s Quarterly Labour Force Survey (QLFS), decreased, albeit marginally, by 0.6 of a percentage point from 34.5% in the first quarter to 33.9% in the second quarter – down from an all-time high.

The expanded unemployment shows a similar downward trend over the second quarter, with it declining from 45.5% in the first quarter to 44.1% in the second, said PwC.

Knock on effects

The exclusion of millions of adults from partaking in the country’s economic life is contributing to the decline in social cohesion, says PwC.

“This, in turn, is causing an increase in societal breakdown and stability risks associated with protests and unrest.”

PwC warned that when the general population is not prospering, societies are in deep trouble; “real and felt prosperity is are absolute requisites for countries or regions to function effectively.”

In July, banking group Absa reported that rising unemployment, alongside other factors, has the potential to fuel civil unrest in South Africa.

“Both unemployment and inflation are higher at present compared to the levels seen during the July 2021 unrest. Furthermore, research by the Bureau for Economic Research shows that consumer expectations in Q1 2022 for their household finances were more positive compared to their outlook for the economy,” the group said in April.

Both former president Thabo Mbeki and finance minister Enoch Godongwana have warned this year that governments’ failure to address high unemployment and inequality could lead to growing discontentment.

2. Ambulance services down:

Nelson Mandela Bay’s ambulance’s dispatch has been offline since 17 September due to kilometres of copper cable theft.

Staff at the police 10111 call centre, and call centre agents 100km away in Makhanda, are dispatching ambulances in Nelson Mandela Bay through a push-to-talk system, similar to a two-way radio, as the official EMS call centre system has been offline with no repair date in sight.

The health department confirmed that the extended outage was caused by cable theft in the Zwide area, where the metro’s state-of-the-art EMS headquarters is located.

Yet, up to now, the situation has not been explained to Nelson Mandela Bay residents.

This is the latest crisis to hit the service which has struggled in recent weeks due to a refusal by staff to work overtime and a growing backlog of ambulances that need servicing. While the overtime crisis now seems to have been solved, call centre staff on Tuesday found themselves offline for the 11th day.

‘Shocking failure of government’

“Imagine lying bleeding on the side of the road, or being in labour and needing an ambulance, and your calls for help go unanswered. This is a shocking failure of government,” said Democratic Alliance spokesperson on health Jane Cowley on Tuesday.

“I have written to the Eastern Cape Health MEC, Nomakhosazana Meth, to try to establish the reasons for this service delivery collapse and to inquire as to the immediate steps the department will take to rectify this dire situation,” she said.

Health department spokesperson MK Ndamase said the telephone lines at the EMS Nelson Mandela Bay metro went down on Saturday, 17 September and had not yet been fixed. 

“The Telkom technicians were called and they arrived on site and tested everything in the server room. According to their report, the interruption was due to the theft of a four-kilometre cable that runs from the base to the exchange.”

Due to heavy rains, Telkom has been unable to locate the exact area in which the theft occurred, but replacement cables have been ordered.

Ndamase confirmed that ambulances were now dispatched by the police 10111 call centre, where an EMS member had temporarily been placed.

He said people should dial 112 and ask for the Makhanda EMS control centre to access ambulances.

3. Electric vehicle hurdles:

South Africa needs to look beyond just the production of new energy vehicles (NEVs) and stimulate demand for them – and there must be price parity between the import duties charged on these and internal combustion engine (ICE) vehicles, says Mark Raine, co-CEO of Mercedes-Benz Cars and executive director of Mercedes-Benz South Africa (MBSA).

Raine says there is also a need for the government to finalise its policy for NEVs as soon as possible.

The government in May 2021 published an Auto Green Paper on the advancement of NEVs in South Africa, with its stated aim being to finalise the strategy within 90 days to allow the policy proposals to be submitted to cabinet for consideration by October 2021.

Almost a year has passed since the latter date – and the strategy itself has not been finalised.

Raine and Mikel Mabasa, CEO of automotive business council Naamsa, both told a panel discussion on ‘South Africa’s Electric Automotive Future’ on Wednesday that discussions are still taking place with original equipment manufacturers (OEMs).

Mabasa says the government has been saying very consistently that it is consulting with stakeholders and is talking to OEMs individually.

“Government has been procrastinating [on this] for far too long.

“The consultations and the things they have done up until now do not justify the amount of time they have taken to get us where we are,” says Mabasa.

“We have not seen anything that says this is the direction they want to take.”

Lead, or play catch up?

Collins Makhado, a director at KPMG responsible for strategy, people and change, doesn’t believe there is sufficient foresight of the new reality and what is coming, particularly as there will be winners and losers.

He says all factors need to be taken into consideration to determine which parts of the value chain will disappear, and to be prepared for this.

Raine says SA as a country needs to “play to win” – it must focus on and grab the production and market opportunities rather than looking at risks and job losses.

Mabasa points out that South Africa’s tax base has not been reviewed for a long time and that 42% of the price paid for a new vehicle goes to the fiscus through a basket of taxes, including value-added tax, ad valorem tax and the tyre levy.

“As soon as you bring down vehicle prices, the sooner you will stimulate demand.”

4. Middle-class mass emigration:

A survey conducted by online market research group InfoQuest shows that one in five working South Africans is either actively making inquiries about leaving the country or are already on their way out the door.

The survey sampled a relatively small grouping of 300 working South Africans, where 5% of the respondents said they have already applied for residency in another country, have been accepted and will emigrate soon.

Extrapolating the data onto the working population of 15 million people, the group said that this represents potentially thousands of skilled workers who are moving abroad.

A further 14% of the survey respondents said they are seriously thinking about emigrating and have made inquiries or submitted applications – while one in three say that they have thought about emigrating but have not taken any action yet.

Around half the respondents said they are happy to remain in the country and have not thought about leaving.

What’s notable about the survey responses is the profile of those who are actively looking to leave. This group is likely to be made up of young families, earning between R20,000 and R40,000 a month – the earning bracket considered to be the middle class in South Africa, according to FNB.

“Also, those currently employed part-time in South Africa are more likely to leave, probably spurred on by their need for more secure job opportunities,” InfoQuest said.

The survey findings align with several other data pointing to the same trend.

A survey conducted by the Social Research Foundation earlier this month – drawing responses from over 3,200 registered voters – found that over half of the country’s top earners and university graduates are considering emigration.

The survey found that 53% of university graduates and 43% of those who earned more than R20,000 a month – again, within the middle class – may leave the country. Overall, 23% of those surveyed said they may look to live in another country.

While the majority of the respondents in both surveys show no interest in leaving, the sizeable portions looking for a way out of the country exacerbate the growing skills and wealth crisis in the country.

5. Apple kicks Russian social media app:

Apple has removed VK, Russia’s biggest social media app – long linked to South Africa’s Naspers – from its App Store, as first reported by The Verge.

Major Western social media platforms including Facebook and Instagram were blocked by the Russian government at the onset of Russia’s invasion of Ukraine.

Adam Blacker, director of content at app analytics firm Apptopia, stated that VK has been downloaded 211 million times since 2015 across both Apple and Google’s app stores, compared to roughly 52 million downloads for Facebook.

VK released a Russian-language statement Tuesday saying its apps were no longer available to download or update on the App Store, but that the apps were still operating for users who’d already downloaded them.

Apple confirmed it had removed VK’s apps from the App Store, but that the apps will continue to function for people who had already downloaded them – although it warned users there could be problems with notifications and payments.

All information sourced from articles posted by: BusinessLive, Daily Maverick, Moneyweb, BusinessTech, and Business Insider.

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